Different trade agreements will not divide ASEAN: RI

Money talks: President and CEO of the Siam Cement Group Thailand Kan Trakulhoon (left) talks at the ASEAN Business Investment Summit (ABIS) in Nusa Dua, Bali on Thursday. The business meeting was part of the 19th ASEAN Summit and Related Summits 2011. Antara/Agus SB

Despite different stances on the US-led Trans-Pacific Partnership (TPP) free trade pact, Southeast Asian nations will stay together to consolidate trade deals they already have with six partner countries to boost trade within the group, an Indonesian official says.

US President Barack Obama last week proposed a new July deadline to finalize the TPP negotiations with Japan, Australia, New Zealand, Chile, Peru and four ASEAN members — Singapore, Malaysia, Vietnam and Brunei Darussalam.

That raised concerns over ASEAN’s “spirit of centrality”, which the region’s leaders believed would ease the 10 member countries into progressing toward the planned ASEAN Community in 2015, which would integrate the region’s economies, cultures, politics and security.

Indonesian Trade Minister Gita Wirjawan said on Thursday that Obama might talk Southeast Asian nations into joining the TPP during his visit to the ongoing three-day ASEAN and East Asia Summit, but that won’t change the region’s centrality spirit.

“Our togetherness is very strong, but it doesn’t mean that one [country] cannot express different views, including its interest in putting forward the spirit of further liberalization with developed nations,” he told The Jakarta Post in an interview on the sidelines of the summit.

According to Gita, Indonesia is among the countries in the region that are “not ready” for the TPP, but the nation might rethink its position in the future.

“We may review [the TPP] in the medium-term. If we can develop the parameters measuring the readiness of our industries, if we can check off the box, then I think we can be open-minded about entering discussions and negotiations. Until then, no,” Gita said.

Free-trade agreements pose challenges for domestic industries, as some imported goods are more competitive than locally made goods, with Indonesian critics calling for a review of the country’s participation in the ASEAN-China Free Trade Agreement (ACFTA) as Indonesia’s trade deficit with China grew and local businesses claimed to be suffering earlier this year.

But policymakers throughout the world are moving toward trade liberalization as the Doha global trade negotiation stalls to boost exports, create jobs and spur economic growth worldwide.

“We are open to international trade, but I disagree with dependency. There are risks. It doesn’t mean that we don’t want to open our trade channels. We want to, but only if we’re ready. In the meantime, let’s benefit from the domestic market,” he added.

Prominent businesspeople in Indonesia’s National Economic Council (KEN), Chairul Tanjung and Chris Kanter, said it’s better for ASEAN to focus on the centrality efforts by making use of the existing deals instead of opening new free trade channels that might hurt local businesses.

The ASEAN Economic Community Council has agreed on what might counter the TPP, called the “framework for regional and comprehensive partnership”, by consolidating the region’s existing free trade deals with China, Japan, India, South Korea, Australia and New Zealand — creating a market of half of the world’s population with a combined gross domestic product (GDP) of US$20 trillion.

Chairul, who heads the KEN, said Indonesia “needs to be more careful in making alliances” so that the benefits will be greater for the people than the losses.

“There are two sides here: the US and China,” he told the Post on the sidelines of the ASEAN Business and Investment Summit.

Political tension between the US and China is on the rise as the US protested China’s currency depreciation policy, which made Chinese imported products more expensive and disrupted purchasing power and trade balances elsewhere in the world. China, the world’s second-biggest economy after the US, is an export-driven economy.